Sesame group chief executive Patrick Gale says only his network, Tenet and Bankhall will survive, writing off smaller networks as “minnows” which will disappear.
He says unless an appointed representative network has at least 500 members, he does not believe it will be around once the current consolidation has been completed.
He said the lure used by smaller networks of lower membership fees and a more personal service will not work any more, given the sheer weight of regulatory, technical and compliance needs that IFA firms require from their network.
Gale believes smaller players will struggle to offer the four basic planks of any network proposition – service levels from providers, assistance in dealing with the regulatory burden, technological support and better commission.
He is keen to stress that the comments do not come as part of a bid to attract members as he says Sesame members do not tend to come from smaller networks.
He says: “The proposition these networks can put in front of their members is being attacked on all fronts. They will increasingly be under huge pressure over the next couple of years and they will find it very hard to survive at all. It is getting a lot harder to make any money in this business and I think it will be only the very big that will survive.”
Falcon Group chief executive Allan Rosengren says: “We are not going to disappear from the marketplace . We have a strong financial position and have been profitable for the last 20 years. A network does not have to be big to make money and many of the big players are losing money quite substantially.”